Struggling families need nonprofit services now more than ever, but grants to the groups have dropped by more than 25 percent

RALEIGH (Oct. 18, 2010) -- State funding for nonprofits has dropped precipitously in the past year, imperiling community services and threatening significant numbers of jobs, a new study finds.

Grants to nonprofit organizations for services such as community and economic development, post-secondary financial aid, environmental preservation and assistance with food and shelter plummeted more than 25 percent from fiscal year 2008-09 to fiscal year 2009-10, says a report released this morning by the NC Justice Center’s Budget & Tax Center.

State grants to nonprofits dropped by more than 25 percent in fiscal year 2009-10, a decrease that is about ten times larger than the drop in the total state budget in the same year.

“Support for nonprofit organizations in North Carolina is dropping drastically,” said Edwin McLenaghan, the BTC public policy analyst who authored the report. “With the Great Recession continuing to increase the need for the services nonprofits provide, this is increasing the burden on struggling families and communities.”

The decline in state grants to nonprofits coincides with decreasing financial support from private donors and an increase in the need for nonprofits’ services driven by job losses and cutbacks in government-provided services.

Besides providing direct services, nonprofits also employ hundreds of thousands. Nonprofits in North Carolina account for roughly 400,000 jobs in the state, almost one-tenth of the state’s workforce.

With the budget cuts, nearly half of nonprofits in North Carolina reported reducing their number of employees in 2009.

“Continuing to cut back on state funding for nonprofits in North Carolina not only threatens the quantity and quality of services nonprofits provide,” McLenaghan wrote in the report, “it also threatens jobs at a time when nearly one in ten North Carolinians remains out of work.”